Pro-competitive policies and the convergence of markups

This paper gives estimates of sectoral markup trends over the last three decades. It concludes with a slight increase of price-cost margins overall, contrary to the generally expected effect of increased competition. More strikingly, it establishes a clear pattern of markup convergence across countries and sectors. These movements explain a notable part of the decline in the labour share. Taking into account labour market imperfections, they suggest that the workers' bargaining power has deteriorated and stress that endogeneous market structure, rent sharing and interactions between product and labour markets are key ingredients for assessing the impacts of increased competition.